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BIS I - 5th semester bcom notes

Bachelor of commerce (bcom) (University of Calicut)

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Business information system (Module I)

Data
Data are raw facts or observation typically about a physical
phenomenon. Any raw facts used for processing is called data.
Information
The processed data are called information. Information will
have logical connection and it is meaningful.
Difference between data and information
Data Information
Raw facts and figures Processed data
unprocessed
Data is sometimes unrelated Information will have some
to one another. logical connection.
It may or may not be It is always meaningful
meaningful
It cannot directly used for Always used in decision
decision making. making process.
Unorganized structure. Organized structure.
No value. Have value.
Characteristics of information
1. Accuracy
2. Completeness
3. Timeliness
4. Relevance
5. Reliability

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Types of information
1. Strategic information
This information used by the top level management. It is used
for long term purpose. This information is useful to the broad
objectives and policies of organizations.
2. Tactical information
This information is used by middle level management for
effective utilization of resources of the firm.
3. Operational information
This information is used by lower level management. This type
of information used for short term purpose.
Knowledge
Knowledge plays a vital role in day to day operation of running
an organisation. Knowledge can referred to as acquiring and
remembering a set of facts or the use of information to solve
problems.
Features of knowledge:
1. Knowledge is infinite.
2. Dynamic
3. Continuous and ever expanding.
4. Becomes obsolete.
5. Provisional, subject to criticism.
6. Contradiction, change or modification.
Types of knowledge
1. Explicit knowledge.
It is the most basic form of knowledge that can be easily passed
on to others. When data is processed, organized, structured
and interpreted, the result is explicit knowledge.

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2. Tactic knowledge
Tactic knowledge is personal knowledge that may or may not
be expressed by an individual.
Information and Communication Technology (ICT)
ICT is defined as the combination of informatics technology
with other related technologies, specifically communication
technology.
Information Technology
It is the study or use of systems for storing, retrieving and
sending information.
Types of communication devices
 Telephone
 Telegraph
 Telex
 E-mail
 Television
 Audio conferencing
 Video conferencing
 Document imaging
 Mobile phones
 Voice mail
Applications of ICT
1. ICT in business
2. ICT in financial services
3. ICT in entertainment
4. ICT in public service
5. ITC in education

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Role of ICT in business

 Global reach
 Productivity
 Commercial advantage
 Monitoring
 E-commerce
 Teleconference
 Communication
 Inventory management
 Image scanning
 Customer relationship management
Management Information System (MIS)
According to Gerome Kanter, “A system that aids management
in making, carrying out and controlling decisions.”
Characteristics/ features of MIS
1. Management oriented
2. Management directed
3. Integrated concept
4. Common data base
5. Avoid redundancy in database
6. Heavy planning
7. Subsystem concept
8. Common data flow
9. Flexibility and ease of use
Basic concepts of MIS
 User-machine system
 Integrated system
 Need for database

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 Utilization of models
Basic components of MIS
1. Data gathering
2. Data entry
3. Data transformation
4. Information utilization
Elements of MIS
 Management
 Information
 System
Purpose/Objectives of MIS
1. To manage effectively
2. To reduce cost
3. To produce reports
4. To provide statistics
5. To provide information for decision making
6. To improve efficiency and productivity
7. To improve decision
8. Protection of crucial information
Functions of MIS
 Data capture and collection
 Storage
 Information processing
 Distribution and dissemination of information
MIS and other academic discipline
1. MIS and management accounting
2. MIS and management science
3. MIS and management theory
4. MIS and information technology

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Advantages of MIS
 It facilitate planning
 It minimize information overload
 It encourage decentralization
 It brings coordination
 It makes control easier
 It helps in strategic planning
 It increase efficiency of business
 It helps in comparison of business performance
Disadvantages of MIS
 Lack of quality of output
 Not a Substitute for judgement
 No tailor made package
 Lack of flexibility
 Costly affair
 Ignoring non-quantitative factors
 Greater chance for failure
 Frequent changes to top management
 Hording of information
Basic structural concept of MIS
1. Public information system
It is a part of an organization and all the relevant persons have
knowledge about the information system and everyone has
access.
2. Private information system
It is maintained by privately where certain piece of information
are not available to others and there is a discrimination in file
accessing.

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3. Formal information system

There is a certain well prescribed rules and procedures to be
followed processing and data dissemination.
4. Informal information system
There is no rules and procedures for data processing and
sharing.
5. Formal public information system
Management information system with its specified rules and
procedures is a part of formal public system
6. Informal public information system
Strict rules and procedures may not be found in this
information system.
7. Formal private information system
Besides these formal and informal system, there are also formal
and informal private system in an organization.
8. Private informal information system
Many individuals may maintain their own private information
system for discharging their duties more effectively.
Multiple approaches to the MIS structure
1. MIS structure based on operating elements.
2. MIS structure based on decision making.
3. MIS structure based on management activity.
4. MIS structure based on organizational functions.
1. MIS structure based on operating elements.
The structure of management information system can be
viewed in terms of its operating elements. The various
elements necessary for the operation of MIS is known as its
operating elements. Operating elements of MIS consists of
a) Physical components.

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b) Processing functions.
c) Output for uses.
a) Physical components:
Hardware, Software, Database, procedures and operating
personnel are the important physical component required for
the implementation of MIS in an organisation.
Hardware: All physical components of computer system is
called computer hardware. Important components includes
CPU, input output device, storage unit and communication
devices.
Software: Software provides the interface between users and
information system. It refers to the instruction given to the
hardware to perform various operations. Software can be
divided in to two- system software and applications.
 System software- It comprises of operating system, utility
programs and special purpose programs.
 Application- These are developed to accomplish a specific
task.
Database: It is a centrally controlled collection of organized
data.
Procedures: Procedures are the operating instructions for the
people who use an information system.
Operating Personnel: People are needed for the operation of all
information systems. The personnel in MIS include computer
operators, programmers, system analyst and managers.
b. Processing function
An information system can also be described in terms of
processing function. The important processing functions are
a. Process transactions

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b. Maintain master files.

c. Produce reports.
d. Process enquiries.
e. Process interactive support applications.
c. Output for users
Output is considered to be a major factor of an information
system. It can be classified as
a. Transaction documents
Documents produced by transaction processing system are
called transaction documents.
 Action documents- These document initiate an action or
transaction on the part of the recipient. Eg: Purchase order.
 Information documents- These documents relates, confirm
or prove to their recipients that transaction have occurred.
Eg: sales receipts, sales order confirmation.
 Investigational documents- Reports of exceptions, errors or
other conditions may be require investigation.
b. Preplanned reports
These have a regular format and content. These reports are
produced at regular intervals. Eg; Inventory balance and sales
analysis.
c. Preplanned enquiry response.
Enquiries are handled on line which means the enquiry is made
and the response is received immediately via terminal.
d. Ad hoc reports.
These reports are produced at irregular intervals and the
information content and its format has not been preplanned.

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e. User machine dialogue.

It is essentially a way in which a user can interact with a model
to arrive at an analysis or solution.
2. MIS structure based on decision making
The ultimate purpose of MIS is to make decision at all levels of
operations based on information flow. The habit of making
decisions is based on the problem solving process.
Decisions making involves the following 4 stages:
 Intelligence phase: This stage consists of identifying and
understanding the problem occurring in an organisation.
 Design phase: In this stage decision makers evaluate all
possible causes of action.
 Choice phase: Under this stage, manager select most
favourable cause of action from different alternatives.
 Implementation: In this stage, decision is putting to effect.
Programmed decision
It is the one in which decision rules are applied. These decisions
are routine and repetitive. It is also called structured decision.
Characteristics / Features of programmed decisions
1. These decisions are well defined.
2. These decisions are repetitive and routine in nature.
3. Cost of taking decision is low.
4. Decision can be done with the help of computers.
5. Decision can be delegated to lower level employees.
6. Predetermined decisions rules are used.
Non-programmable decision
These types of decisions are occasional and unique in nature.
There are no predefined procedures available to solve the

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problem for each occurrence. It is also called unstructured

decisions.
Characteristics / features of non-programmable decisions
1. These are occasional and unique in nature.
2. These are not repetitive.
3. No predefined procedures.
4. These decisions cannot be delegated.
5. Cost of taking decision is high.
3. MIS structure based on management activity
MIS provides useful information to different levels of
management for discharging their functions more effectively
and efficiently.
a. Strategic management: The first decision area of
management is strategic planning level or top level
management. It consists of board of directors and other chief
executives. They make the organizational goal, objectives,
strategies, policies etc.
b. Tactical management: Management control level or middle
level management decisions involve financial or personal
consideration. They develop medium range plans and
defining objectives of their departments.
c. Operational management: Operational management or
lower level management deals with routine activities. They
make short term plans to carry day to day activities more
effectively and efficiently.
4. MIS structure based on organizational functions
MIS is typically an integrated combination of functional
information system that is designed to meet information
requirement of the functional sub divisions of an organisation.

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Functional sub systems:

 Production
 Marketing
 Human resource
 Finance and accounting
 Logistics
 Information processing.
Data redundancy
It occurs when the same piece of data is stored in two or more
separate places and it is a common occurrence in businesses

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